Gurugram-based SME lending platform Clix Capital has raised $40 Mn (INR 282 Cr) in fresh funding from AION Capital.
The company plans to use the funds to further push into the consumer lending segment, while continuing to build its digital platform.
Founded in 2016 by Pramod Bhasin and Anil Chawla, Clix Capital offers financing solutions.
The company was launched after acquiring GE Capital’s commercial lending and leasing business, with AION Capital largely bankrolling the buyout. Bhasin was formerly the founder of Genpact and former CEO of GE Capital India and Asia, while Chawla previously led GE Capital’s commercial business.
The company claims to have about 3 Mn customers since inception. It is also targeting a loan book of INR 5,500 Cr- INR 6,000 Cr by the end of FY20, up from its current estimated INR 5,000 Cr. The company had acquired the loan book of Paytm Postpaid, the online credit business of the digital payments giant.
Clix Capital claims to have NPAs of less than 1% and has seen a significant shift in its corporate lending business vis-a-vis its retail lending. It expects retail lending to represent 70% of its overall lending over the next six months
AION Capital is a joint venture between US-based private equity major Apollo Global Management and ICICI Venture. It holds an 85% stake in Clix Capital. “Apart from the infusion of capital, as majority partner, we are committed to bringing in our global best experiences and expertise of technology and practices to Clix’s business. Our attempt would be to grow the Clix business steadily while maintaining a watchful eye on asset quality and profitability,” Parth Gandhi, senior partner and managing director at AION Capital, said.
Clix Capital is rolling out its digital platform in phases, which will cater to SMEs and retail borrowers. It expects to launch a series of financial products while also using the platform as lending as a service.
The opportunity in the Indian SME lending market is huge. According to a May 2019 IBEF report, the public deposit of Non-Banking Finance Companies (NBFC) increased from $293.78 Mn in FY19 to $4.95 Bn (INR 319.05 Bn) in FY18, registering a compound annual growth rate (CAGR) of 36.86%.
Although there are a lot of positives and potential for NBFCs, their lending habits has not left much to be desired by many, especially after going bust last year because of reckless credit expansion. Many NBFCs are now facing a liquidity crunch due to external developments (IL&FS default) and several investors have taken a step back from the initial investment frenzy to measure their moves, especially with stock prices of the listed non-banks faring poorly.
However, Union finance minister Nirmala Sitharaman’s 2019 budget announced the issuance of INR 70K Cr to banks which will further help recapitalise NBFCs. The impetus to revive the NBFC sector in Union Budget 2019 emphasises the importance of this sector for the Indian economy and measures taken in this budget are expected to improve the situation.